3.6- Managing Change Flashcards
Explain causes of organisational change as a cause of change for a business
Explain the effects of the change in organisational structure
The size of an organisation will naturally change as the business seeks growth. As a firm grows there is a need to restructure and adopt policies to manage expansion.
Competitiveness – growth allows the firm to form economies of scale, brand awareness and market power
Productivity - as a firm grows they are able to alter their methods to become more productive
Financial performance – as a firm looks to grow they will need to invest, funded through retained profits and borrowing
Stakeholders – as a firm grows it is able to provide opportunities for employees for bonuses and promotion, however growth can lead to a loss of connection with customers and pressures on the local community
Explain poor business performance as a cause of change for business
Explain the effects of poor business performance
Poor performance will cause a period of change as the firm strives to regain customers, sales and profits. This change will often be very quick in order to prevent Phalia, by focusing on corporate objectives and strategy.
Competitiveness – poor performance will lead to a lack of competitiveness
Productivity – poor performance leads to a lack of sales, productivity and profitability with a low rate of capacity utilisation
Financial performance – is likely to encounter liquidity problems, with cash flow problems and a need for cost cutting and efficiency
Stakeholders - creates uncertainty and a lack of motivation amongst employees as well as a decrease in shareholder value
Explain changes in the market and other external factors (PESTLE) as a cause of change for a business
Explain the effects of changes in the market and other external factors
Technological – new technology can change the way businesses communicate with their customers and suppliers as well as the pace of innovation and business processes.
Social – changing consumer tastes changes the products firms sell
Legal - new legislation can force changes in business activity
Economic - changing economic cycles change demand
Competitiveness – determined by how quickly a business is able to respond to these changing factors
Productivity – new technology can improve the production process of a firm
Financial performance – changes in external factors need to increase costs as they have to adapt however these costs are experienced by the whole industry
Stakeholders –rising costs are usually passed on to consumers, new technology may lead to consumers being made redundant and reduced profitability impact shareholders
Explain changes in ownership as a cause of change for a business
Explain the effect of changing ownership
Occurs from internal growth, the transition from LTD to plc to raise share capital, and external growth, as a firm goes through a merger or takeover
Competitiveness – determined on how well the companies integrate together and the success of stock market flotation
Productivity - in the short term the firms productivity will be disrupted as they integrate, although it may eventually rise
Financial performance – is often very expensive but has the potential to become profitable
Stakeholders - clashes of corporate cultures are likely as well as employee redundancies
Explain changes in transformational leadership as a cause of change for a business
A new CEO will bring their own ideas and changes to the company, changing the vision or strategic direction of the firm
Define Change management
Involves the planning and implementation of change within a business
Define Planned change
Is change planned by senior managers in the business, involving owners and senior leadership team
Define Emergent change
Give an example
Is change that happens at any level of the organisation and is the result of a event or need.
E.g. Failed computer systems require new IT systems which then require training
Explain organisational culture as a factor having an impact on the success of change
Resistance to change is often found in the culture of the organisation, where customs and practices are embedded in systems that reflect the beliefs of the organisation. This causes rigidity problems when a firm needs to change
Explain the size of the organisation as a factor having an impact on the success of organisational change
The size of a business significantly affects its ability to manage successful change. The larger the firm the less adaptable and flexible they become and the more employees are likely to resist change.
Explain the speed of change as a factor having an impact on the success of organisational change
Firms face the challenge of aligning expectations with reality. If changes occur too quickly it will cause confusion and stress amongst employees
Explain the reasons why there is a high resistance to change (4)
Fear of the unknown - people often feel safe with familiar work practices and conditions
Employees and managers fear they are unable to carry out new tasks after change
Owners may fear operating in new and unknown markets and conditions
Selective information processing may occur where there is a failure to understand change
Define Scenario planning
Is a strategic planning method designed to explore uncertainties, work out how to protect the business and prepare how to exploit any opportunities that present themselves
Explain the approach to scenario planning (5)
1) Identify possible trends and issues - scanning the internal and external environment in an effort to spot emerging threats or opportunities
2) Build possible scenarios - businesses develop possible scenarios based on the threats that could effect their operations
3) Plan response - involves identifying the impact scenarios will have on the firm and developing plans to deal with them
4) Identify the most likely scenarios- the business will prioritise planning a response to the most likely scenarios
5) capitalise on scenarios - involves implementing the planned response when scenarios appear a reality
Define Risk assessment
Involves identifying and evaluating the potential risks that may be involved in an activity that a business plans to undertake, ensuring compliance with health and safety legislation
